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Next Generation Telephony

An Emerging Business

Communications Strategy

Bob HughesProgram Manager

IBM CIOSept, 2002

IBM Confidential

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Copyright 2002 IBM Company. All rights 2

The current strategic period will see the emergence of

several key technologies with voice particularly well

positioned.

"The Bubble""The Bubble"

AdoptionAdoption

CurveCurve

BusinessBusiness

ImpactImpact

Time, MaturityTime, Maturity

Innovator'sInnovator's

CurveCurve

Enterprise

InstantMessaging

WirelessWeb/WAP

Bluetooth VOIP

Wireless LANs

PDA Phones

Technology

Trigger

Plateau of

Productivity

Slope of

Enlightenment

Trough of

Disillusionment

Peak of Inflated

Expectations

< 2yrs

2! yrs

IBM Confidential

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Copyright 2002 IBM Company. All rights 3

The voice environment is about to undergo a transitionsimilar to the transition the data environment experienceda decade ago.

Mainframe Client/Server

CS/TDM I Telephony

!""0 ############### !""$ ############## 2000 ############## 200$ ############### 20!0

Proprietary OSes

App-specific UIs

3270 terminal

Open OSes

Standard GUIs

PCs

Hdwr-specific sftwr

Proprietary featres

!"# p$ones

Open software

Standard GUIs

Intelli%ent endpoints

IBM Confidential

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Copyright 2002 IBM Company. All rights %

Our basic premise is that we are nearing the end of circuitswitch technologys ability to provide annualcost/performance benefits.

For ecaes, enterprises ha!e pressure current !oice !enors to"o#er cost an increase $unctiona"ity using e%isting techno"ogy&

In genera", #e ha!e been success$u"&

Ho#e!er, the opportunity to achie!e continue impro!ements

#ithin the circuit s#itche'time i!ision mu"tip"e%ing techno"ogy isbecoming increasing"y "imite&

(e must mo!e to a ne# techno"ogy to continue to pro!ie annua"bene)ts&

*his ne# paraigm $or !oice is !oice'ata con!ergence&

Fina""y, #e must gain a true unerstaning o$ +con!ergence, ho#

!oice an app"ications #i"" be enhance& (e must recogni-e that !oice is .O* /ust ia" tone anymore&

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In the !N" prices have declined and are at orapproaching prices below which circuit switching cannotgo.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

1996 1997 1998 1999 2000 2001 2002 2004 2004 2005

Domestic US !ans "#!o$e US to U% !ans &' S( )!es)old

Coster

Min&te

'n/'ff (ate Trends and ro)e*tions

Applied (esear*h

Te*hnologies

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Copyright 2002 IBM Company. All rights +

The transition to next generation telephony re#uiressimultaneous development on multiple levels$ I% transport"&I% protocol and !pplications.

IP Transport (plumbing)

SIP Protocol

Base

Business

Communications

Applications

time

Focus

Base Inte*!ate &d+anced

IP Transport"# $oll bypass %WAN&

'ate(ays to $DM

'ate(ays to P)$N

IVPN or Po(er*

2# Lo+al %LAN&IP telephones

IP so,tphones

ApplicationsPresen+e

-ollo(Me

Multi+asting

Instant Messaging

Et+#

SIP Protocol)er.ers

all Manage0ent

Pro1y

e3ire+tion

Dire+tory

/lients)IP phones

)IP so,tphones

M) Messenger

E1ternal )er.i+es

IBM Confidential

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7/21Copyright 2002 IBM Company. All rights ,

! budgetary comparison between T'( and I% for the )!Nshowed I% preferable under both the local server andserver farm based server models.

T'( vs &erver *ased I% )ocal

&ervers

+

,++-++

.++

/++

0+++

1++ 0+++ 2+++

&ite &i3e 4in &tations5

6ostper&tation T'(

I%

)ocal vs &'6 *ased &ervers$

1++ &tations per &ite

+

,++-++

.++

/++

0+++

,&ites . &ites

6ostper

&tation T'( )ocal

T'( &'6

I% )ocalI% &'6

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Industry pro7ections for !N 8oI% shows decreasing costper minute.

+

+.+0

+.+,

+.+2

+.+-+.+1

+.+

+.+9

+.+

+.+:

6ost perminute

Avg 'ff et Carrier (even&e per Min&te

I oi*e Min&tes

S (etail

ote1This data *overs servi*es offered

y *arriers not I transport over

*onverged *orporate net4or5s

IDC 62+3$%

7an 2002

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9/21Copyright 2002 IBM Company. All rights "

Industry pro7ections for )!N based 8oI% show decliningcost per station.

+

1+

0++01+

,++

,1+

2++

21+

-++

-1+

,+++

,++0

,++,

,++2

,++-

,++1

,++.

6ost perphone

8orld Side Cost per I hone

S 9IDC April 2002

(ept 6 2+",,

:a*tors driving *ost do4n1

Competition ;in*l 3rd party

Saves 9.02 # 9.0$oi*e over o4er" ;tr&e *onvergen*eo*al Message (e*ording

Saves >D *ost if *alled 6 &sy

I *onferen*ing

'ther

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New paradigms in voice also promise savings.

Cost

Per

Unit

Time

Self provisioning saves 92$ per station

Drop S re&irement saves 9%$ per station

Des5 top po4er saves 9,0 per station

Converged do*&mentation and pro*esses

Saves lo*al implementation effort ;TBDite

Conv

erge

ddo

*

>o*al

Msg(e

*

/M>

apps

Softp

hone

# # #

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8oice realities in the industry and at I*( re#uire a newway to loo; at business cases. e will no longer be ableto rely solely on cost savings and must loo; to productivityand revenue enhancements.

Cost and

Savings

rod&*tivity

nhan*ement

In*reased

(even&e

B&siness

Case+ + =

Business Transformation

The reality of voi*e &siness *ase at IBM1

Inventory is aging often f&lly depre*iatedTherefore the *ase for *hange on solely *ost/savings asis is to&gh

The role of f&n*tionality offered y ne4 te*hnology 4ill play ma)or part in &siness *ase

asy to *al*&late

asy to implement

Drive vendors for

lo4er *osts

Diffi*&lt to meas&re

Diffi*&lt to &antify

Diffi*&lt to &antify *ontri&tion

Meas&red at *orp level

IBM C fid ti l

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I*( has a forward thin;ing voice vision/goals/ob7ectivesstatement.

IBM Confidential

*rans$orm IBMs !oice in$rastructure intoone that1 Is increasing"y cost eecti!e

Increases en3user proucti!ity ansatis$action

Sho#cases IBM proucts, ser!ices an

so"utions Acce"erates IBMs business a!antage

Aresses i!erse g"oba" re4uirements

IBM Confidential

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The I*( strategy focuses investments in new technologyand loo;s beyond convergence for benefits

Avoid investing any new $s in TDM technology,where possible.

Look beyond the convergence on IP transport. 5oice becomes +/ust another IP app"ication&

*e"ephones become +/ust another app"ication en3point&

*he u"timate payo is in the integration o$ the

+!oice app"ication #ith other app"ications& *he rea" !a"ue in ne%t generation te"ephony is in

app"ication integration, more than IP transport&

Leverage IP telephony to converge along mltipleplanes.

6ata an !oice transport& (ire an #ire"ess ser!ices&

5oice an instant messaging&

5oice enab"ement o$ e%isting app"ications&

IBM Confidential

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I*(s Next Generation Telephony !rchitecture is a layeredarchitecture< and we anticipate applications that leverageservices from multiple layers.

End Points

Transport, Switching

And Routing

Ca Contro

Signaing

Ser!ice

Appication

"nterface

Appications

hones

Softphones

Cell hones

DA

Softphone >ite

ideo

o4er" thernet I 8ireless 8

EoS

SI Dial lan F 8 B8 Ctl Admission Ctl

ST/8ireless ;Cell and -02.!!< Interfa*e

Dire*tory ;In*l M

TeGt to Spee*h

Spee*h (e*o

(o&ting Apps

Same Time

Calendar

nified Messaging

Smart A&dio Conf

C(M

Many 'thers

A2stra*tion

>ayer

DS>

App ! App App 2 App 3

A&dio Bridge

En d

t oEn

dMa

na ge

me n

t

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Copyright 2002 IBM Company. All rights !"

I*(s experience in 8oI% business cases is emerging. It isinfluenced by inventory of spare e#uipment 4)!N5 andimplementation of new !N

Premise 7I&e& IP PB891

Ini!iua" :FPs are high"y competiti!e an o$ten i;cu"t tocharacteri-e

Because #e ha!e so much *6M e4uipment in in!entory, #e o notha!e many pure pro/ect comparisons o$ *6M !s& IP

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"24 o, Population on IP phones 2!4 o, AP sitetosite tra,,i+ on IP IVPN

EMEA WAN -P in e.aluation

5#)# WAN %Po(er*& pilot 26/76 2882

I*( has successfully deployed 8oice/'ata convergence ina number of pro7ects.

IBM Confidential

9Calgary Sales & Svc9Cisco AI!9#$ phones

9Toronto So%tare 'ab9Cisco AI!9$$$ phones

9Tel Aviv Country *+9Cisco AI!9,#$ phones

9Singapore Sales & Svc9Cisco AI!9-$$$ phones

9AP Inter.site9-, sites

9up to #$/ o%

tra%%ic

9!ubai 0 1e Facility9Cisco AI!92$$ phones

9In3ia site.to.site92 site pilot9, sites i% success%ul

In Pro3

In Pro3

In Pro34une Pilot4une Pro3

4une Pro34une Pro3

956S6 Poer7 8A19Cisco gateays9# sites

4une Pilot

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e have excellent communications tools and depend onthem daily. =et they dont always wor; together.

'n a good day1

My C 4or5sMy IM 4or5s

My appli*ations 4or5My phone 4or5s

My *ell phone 4or5sMy DA 4or5s

Everything Works!

But none of them rea# wor$ together

What if they did?